Arm is a strong technological bet, whatever about its share price

The British CPU firm’s rollercoaster ride on the stock market should not be allowed to cloud its importance, says Jason Walsh

22 September 2023

Shares in chip designer Arm hit the stock market last week in what was likely the most anticipated initial public offering (IPO) of the year. In fairness, given the lack of appetite for IPOs, particularly tech ones, since the end of the pandemic this may be faint praise. Nonetheless, Arm’s introduction to the stock market – or rather reintroduction, as Arm was a publicly traded company before being gobbled up by Japan’s Softbank in 2016 – was nothing if not exciting.

Shares shot up by more than 25% on the first day of trading but have now dropped down to below its IPO price. This is not significant, though; it’s just another wacky day in the markets. Arm remains an extremely significant company in today’s global economy, and its importance looks set to grow.

For those who don’t know, Arm has humble origins: designed in-house during the 1980s at Britain’s Acorn Computers, the Arm CPU was created by Steve Furber and Sophie Wilson in order to secure the post-BBC Micro future of the company. In the end, Arm became a world beater while Acorn faded.




The great benefit of Arm’s CPU design is that it delivers power without using much power. In order to allow Acorn to save money, the chip was designed to run cool, thus allowing it to be supplied in a plastic package rather than a ceramic one. The upshot of this is that while some CPUs guzzle electricity, Arm chips sip it.

This was a matter of curiosity in the design’s first decade, with Arm CPUs going into Acorn desktop machines where electricity use was of little concern. Times changed, however. In the 1990s, Apple used Arm CPUs in its handheld Newton devices, but it was the rise of the smartphone in the 2000s that transformed Arm from a niche chip designer into one of the most important companies in the world.

Famously, Steve Jobs asked Intel to design a power efficient chip for the iPhone but the chip titan wasn’t interested. Instead, Apple turned to Arm, and the rest is history.

Today, CPUs based on Arm designs power a staggering 99% of smartphones. In addition, their elegant design has also made them popular in the embedded market, while concerns about energy use and climate change are now driving server use (Amazon alone gobbles them up at a staggering rate). Apple has even brought Arm back home to the desktop, with its Arm-based Apple Silicon wowing users. Growth on the Windows side has been slow, but support from Microsoft will likely see the pace grow.

Arm and its designs certainly face challenges, including from Chinese manufacturers and from the open source RISC-V design. Arm is fighting back, though, with plans to supply almost complete custom chip designs to its customers: as an analogy, think of tailored clothes rather than either off-the-rack at one end and bespoke at the other.

Clearly the company wants to strongarm its way into the server market, and given concern about electricity use in data centres, not to mention the success delivering a superior power to performance ratio of Apple’s custom Arm designs on the desktop, there is little reason to doubt it will succeed.

Arm’s chips may not need cooling, but the silicon battle is certainly warming up.

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